Correlation Between Babcock Wilcox and Gelteq Limited
Can any of the company-specific risk be diversified away by investing in both Babcock Wilcox and Gelteq Limited at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Babcock Wilcox and Gelteq Limited into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Babcock Wilcox Enterprises, and Gelteq Limited Ordinary, you can compare the effects of market volatilities on Babcock Wilcox and Gelteq Limited and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Babcock Wilcox with a short position of Gelteq Limited. Check out your portfolio center. Please also check ongoing floating volatility patterns of Babcock Wilcox and Gelteq Limited.
Diversification Opportunities for Babcock Wilcox and Gelteq Limited
0.25 | Correlation Coefficient |
Modest diversification
The 3 months correlation between Babcock and Gelteq is 0.25. Overlapping area represents the amount of risk that can be diversified away by holding Babcock Wilcox Enterprises, and Gelteq Limited Ordinary in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Gelteq Limited Ordinary and Babcock Wilcox is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Babcock Wilcox Enterprises, are associated (or correlated) with Gelteq Limited. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Gelteq Limited Ordinary has no effect on the direction of Babcock Wilcox i.e., Babcock Wilcox and Gelteq Limited go up and down completely randomly.
Pair Corralation between Babcock Wilcox and Gelteq Limited
Given the investment horizon of 90 days Babcock Wilcox Enterprises, is expected to generate 0.09 times more return on investment than Gelteq Limited. However, Babcock Wilcox Enterprises, is 11.05 times less risky than Gelteq Limited. It trades about 0.24 of its potential returns per unit of risk. Gelteq Limited Ordinary is currently generating about -0.18 per unit of risk. If you would invest 2,090 in Babcock Wilcox Enterprises, on August 31, 2024 and sell it today you would earn a total of 261.00 from holding Babcock Wilcox Enterprises, or generate 12.49% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Weak |
| Accuracy | 36.51% |
| Values | Daily Returns |
Babcock Wilcox Enterprises, vs. Gelteq Limited Ordinary
Performance |
| Timeline |
| Babcock Wilcox Enter |
| Gelteq Limited Ordinary |
Babcock Wilcox and Gelteq Limited Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Babcock Wilcox and Gelteq Limited
The main advantage of trading using opposite Babcock Wilcox and Gelteq Limited positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Babcock Wilcox position performs unexpectedly, Gelteq Limited can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Gelteq Limited will offset losses from the drop in Gelteq Limited's long position.| Babcock Wilcox vs. Cemex SAB de | Babcock Wilcox vs. Sinosteel Luonai Materials | Babcock Wilcox vs. Shandong Longquan Pipeline | Babcock Wilcox vs. CRH PLC ADR |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Pattern Recognition module to use different Pattern Recognition models to time the market across multiple global exchanges.
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